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US FX Market Open – Thursday, April 14, 2016: U.S PRICE DATA THE FOCUS INTO NEW YORK

Posted by Marge Maresca on Apr 14, 2016 7:28:17 AM



Overnight Events

• USD/JPY -0.26%, EUR/USD -0.08%, GBP/USD -0.3%
• DAX +0.15%, Brent -0.5%, DXY +0.04%, Nikkei +3.23%
• CH Mar Prod/import prices -4.7%  y/y vs -4.6% prev
• EZ final Mar CPI 0.0%  y/y vs -0.1% prev, -0.1% exp
• UK You-Gov poll-In and out campaigns tied at 39%, 17% don’t no
• Swiss radio-Possibility SNB reintroducing new EUR/CHF floor on Brexit
• Finnish parliament to debate in fortnight whether to hold EUR referendum
• BoJ Gov Kuroda – BoJ hasn’t shifted policy focus on rates
• Kuroda: Does not think yen rise was caused by NIRP - RTRS
• Suga: Cautious of one-sided FX moves, will take action if needed - Rtrs
• Kuroda-many ways to ease  more if needed

Currency Summaries

• EUR/USD initially lower to 1.1234 on a positive DAX open
• DAX now flat, EUR back up to 1.1260 (range 1.1234-73)
• EUR 2 bln vanilla option expires 1.1235-50
• US CPI data the main event, eyed slightly higher
• Rising risk appetite coming courtesy of higher oil
• Safer asset EUR longs curbed, EUR funding making a comeback

• USD/JPY has seen a range of 109.06-109.55
• Offers are said to be thick towards 110.00, likely to limit further gains
• 447M worth of 109.50 option strikes set to expire at NY cut, 1.2B @110.00
• Relationship with rising Nikkei wanes, Nikkei up 3.23%
• Nikkei futures 48H log correlation with USD/JPY drops sub +0.50
• EUR/JPY range has been 122.73-123.43 so far

• EUR/CHF chop continues with alternating bull/bear sessions this week
• Cross peaked at 1.0910 Wed and closed 1.0903 but dips to 1.0880 today
• Bias remains marginally bullish but probably won’t take much to shift the balance
• CHF still heavily overvalued says SNB’s Maechler-Bbg
• Swiss Radio some conjecture SNB might introduce new CHF cap on a Brexit result
• USD/CHF peaked at 0.9688 but limited pullback so far despite 2% Tues/Wed rally
• Chart: 1) 2)
• GBP/USD fell to an early Europe low of 1.4091 amid Brexit concerns
• YouGov poll for The Times says equal number of Brits want to leave EU as remain
• Wind taken out of subsequent three-quarter cent rally by Ed Conway tweet
• “I understand at least 2” MPC members “considering a vote for a cut”
• Ed Conway is economics editor of Sky News. MPC minutes due 1100GMT

• USD/CAD rose to threaten 1.29 during European am
• Ensuing retreat aided by WTI oil rise from sub-$41/barrel lows


• AUD/USD extended north to 0.7702 during the European am
• 0.7619 was Asia low, after MAS policy surprise, before strong Oz jobs data
• Large 0.7670 & 0.7700 expiries today (closest-to-market), 438mn & 507mn strikes

• NZD/USD plumbed an intra-day low of 0.6824 during the European am
• 0.6919 was early Asia high, before surprise easing from MAS
• AUD/NZD has soared to 1.1220 on the back of the strong Australian jobs data

Today’s events

An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

Option Expirations(Source:ThompsonReuters)

 • EUR/USD 1.1235 479 mln, 1.1245 856 mln and 1.1250 344 mln
• USD/JPY 109.50 427 mln, NZD/USD 0.6850 181 mln, EUR/GBP 0.7950 241 mln
• USD/CAD 1.2800 1 bln, 1.2900 460 mln, GBP/USD 1.4150 312 mln
• AUD/USD 0.7700 507 mln, 0.7670 438 mln

Chart -GBP/USD triple cloud failure (Source:ThompsonReuters)
On Thursday cable bounced from the 1.4091 session low, which is a little above 1.4087 – 76.4% retrace of the 1.4006-1.4348 (April 6-Tuesday) up-leg. Bears will likely continue to target 1.4087 and will eventually need a daily close below 1.4087 to accelerate inevitable losses. Rejection of the Ichimoku cloud which currently spans 1.4166-1.4343, for the third time since mid March, adds to the underlying bearish structure. The long upper shadow on Tuesday’s candlestick line was another warning sign of the offered bias, plus the tenkan and kijun lines are negatively aligned meaning short-term rises are likely to be corrective. A daily close back with the cloud, however, will complicate the picture and give bulls a chance to gain a foothold. Chart:

Economic Data(Source:Bloomberg)





Topics: US FX Market Open


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